South Africa Power Cuts Hit Economy

Frequent power disruptions in South Africa are having detrimental effects on the country's economy, according to an analyst in London.

Industries and residential areas have been hit by daily electricity cuts as state power company Eskom struggles to cope with growing demand.

The cuts could prove more damaging than the impact of global market turbulence if the problem persists, head of emerging markets at 4CAST Nicholas Kennedy told Reuters.

"The potential impact is a lot greater than the international [market] turbulence if you find that South Africa has run into a wall in terms of how business can invest and how the economy can grow," Kennedy says.

The South African Government has vowed to resolve the power crunch and Eskom says it plans to spend R300bn (US$43.27bn) to boost flagging power capacity over the next five years, with the possibility of rationing power sources in the meantime.

By staff writer